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National Organization for Women

July 21, 2015

Office of Regulations and Interpretations

Office of Exemption Determinations

Employee Benefits Security Administration

U.S. Department of Labor

200 Constitution Avenue, N.W.

Washington, D.C. 20210

Re: Conflict of Interest Rule, RIN 1210-AB32

 Proposed Best Interest Contract Exemption, ZRIN: 1210-ZA25

Dear Ladies and Gentlemen:

The National Organization for Women has advocated for nearly a half-century for the economic wellbeing of women and their economic security in retirement is a particular focus of our current work. We 

strongly support the Department of Labor’s (DOL’s) proposed conflict of interest rule. This rule’s 

mandate to provide investment advice in their client’s best interest would especially benefit women 

who can ill afford to have their retirement savings diminished as a result of financial advisers’ conflict 

of interest. We understand that women and modest savers are disproportionally served by nonfiduciary advisors and need the proposed protections to ensure their retirement savings grow safely. A 

clear fiduciary rule would benefit women and modest savers by assuring that their advisers have the 

investor’s best interest at heart and would discourage any potential exploitation that would put their 

retirement investments at risk.

Currently, many women face a retirement savings crisis as women are more likely than men to suffer 

financial insecurity throughout life. This is due, in large part, to the fact that women in all 

occupational categories continue to be paid lower wages and salaries than their male counterparts for 

comparable work. The well-documented gender and gender/race wage gaps cause career span losses 

of approximately $700,000 for high school educated women, $1.2 million for women who graduated 

from college, and $2 million for women who graduated from professional school.1 The cumulative 

income loss during a woman’s working career results in serious shrinkage of their retirement “nest 

egg.”

During retirement, women have less income than their male counterparts because retirement benefits 

are based on their lifetime earnings. Several factors contribute to this problem: the disappearance of 

defined benefit pensions, less income due to sex-based and race-based pay discrimination, time taken 

out of the paid workforce for caregiving and much smaller amounts to save and invest for retirement. 

In 2013, the median annual income of older women was less than 60 percent of the median annual 

income of men the same age. This difference for the average retired woman means $13,000 less to live 

on each year,

2 as noted by the American Association of University Women and the National Women’s 

Law Center. Additionally, women have retirement accounts with balances, on average, lower than 50 

 1 See The American Association of University Women, AAUW Quick Facts, The Gender Pay Gap, January 2015, 

http://bit.ly/leMr2XO. 2 Id.
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percent of men’s.3 Especially as women can now expect to outlive men by approximately three years, 

they need to begin saving for retirement earlier and save in higher amounts. On the whole, women 

investors cannot sustain losses incurred as a result of bad investment advice or excessive fees. One 

very unfortunate outcome is that a significant number of older women live very close to the poverty 

line and as they become more elderly their reduced economic circumstances grow more dire.

Surveys tell us that women are more likely than men to lack investment knowledge4 and to seek advice 

from a paid financial advisor.5 They are therefore more susceptible to being given poor advice against 

their own interests which will harm them financially and negatively affect their quality of life during 

retirement years. (And we now know that women of color have been targeted by financial institutions 

for abusive subprime loans.) The best way to ensure that women’s interests are addressed is to close 

loopholes allowing financial advisers to offer retirement investment advice without being subject to a 

fiduciary duty requiring them to serve their client’s best interest. This would be achieved by the 

DOL’s proposed rule that includes a requirement that advisers and firms legally and openly agree to 

meet the retirement saver’s best interest and prohibit charging more than a reasonable fee for services. 

Firms would have to attest that they are not motivating their advisers to act in their own interests rather 

than those of their customers; advisers would have to disclose how much their advice and products 

would cost in the short and long term. Investors would also be able to hold advisers accountable for 

losses resulting from conflicted advice.

Even as they face sex-based pay discrimination leading to less income and retirement savings, women 

are doing their part by saving at rates 7 to 16 percent higher than men across every income group.6 

The DOL is now doing its part by proposing a rule that would ensure women’s retirement savings are 

maximized rather than depleted due to conflicted interests of their financial advisers. 

Some in the financial services industry have claimed that the proposed DOL rule’s new restrictions 

would make investment advising services far more expensive, cutting off access for modest savers. 

This concern, we believe, is exaggerated as the rule would not prohibit advisers from collecting fees or 

commissions. While some firms may decide it is no longer profitable to advise modest savers as their 

profits currently come from giving conflicted advice and diminishing their clients’ retirements, many 

other firms have demonstrated that it is possible to advise modest savers as fiduciaries and continue to 

profit. 

Another attack against the DOL’s proposed rule is that high compliance costs would outweigh benefits 

and put small firms out of business. It is estimated by the Consumer Federation of America that over 

the next ten years, compliance will cost investment firms and advisers total between $2.4 and $5.7 

billion. This figure may appear large until it is compared to the estimate that the rule would save 

retirement investors between $40 and $44 billion, currently being lost to fur to excessive fees and poor 

investment advice, over the same period. The concern over harming small firms is also inflated as the 

rule would not put significant burdens on small firms who are already providing high quality advice to 

their clients at reasonable costs, as most small firms are assumed to do.

 3 The Vanguard Group, How American Saves 2015, A report on Vanguard 2014 defined contribution plan data 

http://vgi.vg/1NjzhFv. 4 Study Regarding Financial Literacy Among Investors, As Required by Section 917 of the Dodd-Frank Wall Street Reform 

and Consumer Protection Act, Staff of the Office of Investor Education and Advocacy of the U.S. Securities and Exchange 

Commission, at vii-viii, August 2012, http://1.usa.gov/1fMABVZ. 5 Fidelity Investments, Are Women Standing Up to the Retirement Savings Challenge? Women in Investing, 2013, 

http://bit.ly/1GObThC. 6 Id.
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Further, the proposed rule would not significantly restrict adviser’s recommendation options as there is 

a carve out allowing advice to be given regarding large employer-sponsored plans with either over 100 

employees or over $100 million without triggering a fiduciary responsibility. Many adviser services, 

such as order-taking and administrative activities, would also not trigger a fiduciary responsibility 

under the new rule. Not all forms of compensation for advisers involve conflicts of interest. 

Therefore, not all forms of compensation should or will be banned by the new rule. The rule still 

allows for firms to provide educational information about various options without incurring fiduciary 

responsibility and also sufficiently limits adviser liability. The rule evaluates investment plans for 

compliance with standards at the time of investment and thus does not put advisers at increased risk of 

incurring liability if a plan that was in the best interest of the client at the time of investment ends up 

incurring losses. On balance, the proposed rule appears fair to both the profession and to the client.

Women are disadvantaged in terms of building economic security for retirement and cannot afford to 

have their savings diminished by receiving advice against their best interests. Women are increasingly 

making financial and investment decisions for their families and need protections to ensure that their 

adviser is not solely trying to make a self-interested financial gain. The proposed DOL rule would take 

important steps towards ensuring women receive beneficial retirement investment advice and can seek 

redress if they are harmed by advisers acting against their best interests. We urge the DOL to finalize 

and implement this rule as quickly as possible.

Sincerely,

Terry O'Neill

President